Court Determines Meaning Of Prima Facie For QIW

A medical report that defendants consider to be less than adequate, according to an appellate court will be sufficient to award applicant retroactive vocational rehabilitation maintenance allowance benefits.

The applicant in this case was a clerk who suffered an admitted injury, for which only permanent disability of only 6 Vi % was awarded. Applicant also filed for rehabilitation relying on a medical report that indicated that he could no longer perform his job as a clerk. Neither the applicant or the defendant filed any additional medicals with the Rehabilitation Unit. The Rehabilitation Unit found the applicant QIW and ordered services and benefits be provided.  Defendant appealed and included several other medical reports with the appeal. The Judge determined the applicant was not QIW and the applicant did not appeal that issue.  The applicant did appeal to receive retroactive benefits between the application and the determination of not being a QIW.

In Industrial Indemnity v. WCAB the court stated that an applicant will be paid benefits during the “evaluation” period when the applicant has made a prima facie showing of QIW. In the present case the defendant argued mat the Judge correctly ruled that applicant has not made a prima facie case.

This court noted that when reviewing for “substantial evidence”, a medical opinion which is based on a false or an inaccurate or incomplete history may not satisfy that standard.

The Court looked at this specific medical report relied on by applicant in this case and Court indicated that on its face the report was perfectly adequate.

The ruling indicated that”… a prima facie case is shown when a party presents evidence which, if unrebutted and credited, would justify a finding in his favor….But if the evidence is later rebutted, or is not credited by the trier of fact, mat does not deprive it of its original character….we mink it is obvious mat a determination of whether or not a showing meets a required ‘prima facie” standard is made without reference to contrary evidence and without evaluating credibility.” The Court went on to say that”… a showing which qualifies as sufficient ‘on its face’ is not deprived of mat qualification simply because later events, and the submission of additional evidence, persuade the trier of fact to reject it in making a final determination.”

Therefore, once the applicant has a report identifying him as a QIW, benefits will not be denied during the evaluation period simply because the employer has a better or more credible report. The Court also indicated that applicant has no duty to submit any medical other mat the one he/she is relying on.

The Court only inferred mat a finding of bad faith may defeat the claim for retroactive benefits. What may be inferred is that only deliberate lies or sub rosa films may defeat the claim for benefits.

Lottery Agent is Caught “Going And Coming”

A “Lottery agent*’ filed a workers’ compensation claim in an attempt to hit the compensation jackpot. As many of our own attempts to win the lottery have failed, so did the applicant’s attempt in this case fail.

The “lottery agent” carried the status of a peace officer. His job assignment included field work fifty percent of the time. He was provided a state-owned vehicle. The applicant was required to work after normal business hours, including weekends and holidays.

One morning, he was leaving his home and slipped on an icy sidewalk.  He was on his way to work, but had not entered his state-owned vehicle. He was injured and filed his claim. The State contended this injury did not arise out of the employment and was not in the course of employment.  “Ordinarily an employee cannot obtain workers’ compensation for an injury suffered while going to or coming from the workplace (the “going and coming” rule), because the employment relationship is deemed .  suspended from the time the employee leaves work until the time the employee resumes work”.

The court cited the numerous exceptions to the “going and coming” rule, including the exception for driving a company vehicle to work and being injured in that commute. “In every case where this exception has been held to apply, the employee was actually driving the employer-furnished vehicle when he or she sustained injury. To stretch this exception so far as to include cases such as the present case, would make it almost infinitely elastic. If an employee has already begun his commute in an employer-supplied vehicle when he steps of the door of his house, he might just as well be said to have begun it when he steps out of bed in the morning. Both conclusions are absurd, and the second is not more so than the first.”

The court analyzed the rationale for the “ employer-supplied vehicle” exception to the “going and coming rule”. They indicated that me “special mission” exception was equally inapplicable. The court did seem to imply that if an officer were wearing a uniform that may make a difference.  In this case the agent, was wearing a gun and a pager, but was not in uniform. They concluded that since the officer was not in uniform, he was not covered under another exception to the “going ‘ and coming” rule.

It is refreshing to see that the court is willing to draw a line where compensability can begin.

Credit For Third-Party Recovery Protected

Samuelsen, Gonzalez, Valenzuela and Sorkow brought this action which produced a favorable result for defendants in compensation cases involving third-party litigation.

Mr.Hagadom suffered an admitted industrial injury. Mr. Hagadorn sued a third party. American Home Assurance, the workers compensation carrier, filed a lien in the third-party action. A complaint in intervention was not filed.

The third parry earner settled with Hagadorn on condition that the third-party action be dismissed with prejudice before American filed a complaint in intervention. The purpose was to defeat American’s lien claim.  The third-party action was dismissed with prejudice without a complaint for intervention on file, and American’ hen claim was defeated. Mr. Hagadorn and his attorneys received a check for $650.512. Our firm then brought this action alleging that the applicant was receiving a double recovery and that the tactics that applicant used were unfair.

The appellate court looked to the statutes involving third party causes.  Labor Code section 3852 allows the applicant to bring the action but gives the employer a first lien against the judgment or settlement.

American relied on sections 3859 and 3860. The appellate court stated that the issue is whether Hagadorn had the right to settle his third-party action without notifying the employer of the settlement.  The court held he did not and made some other interesting comments.  The court reviewed a school district case involving the Public Employees Retirement System (PERS). The applicant settled without notifying PERS of the settlement. The Supreme Court indicated that PERS had no cause of action against the settling defendant in the third-party action. The employer’s remedy was against the employee, not the third-party tortfeasor.  Thus, American’s cause of action was against Hagadorn and not the settling third-party insurance carrier.  Applicants beware! If the applicant settles without notifying the compensation carrier he or she does so at his/her own risk.

The court also discussed third party allegation of employer negligence. The filing of a lien in third-party actions is insufficient when employer negligence is alleged. A complaint in intervention must be filed when there is the allegation of employer negligence.  However, the employer must be put on notice that such a defense is being raised. That duty falls on the applicant.  Thus, if the applicant does not notify the employer of the defense the employer has a right to maintain an action against the employee to recover the money it has expended on the compensation case.

When Can You Rescind a Stipulation For Award?

In some instances you may enter into a stipulation and later determine that you do not want to be bound with that stipulation. A recent case has discussed the parameters of being relieved of the previous stipulation.  After the application was filed, the carrier entered into a Stipulation with Request for Award. The stipulation admitted AOE-COE but reserved jurisdiction on T.D. and P.D.. The parties also agreed on an AME. There was then a question as to whether the AME then found the injuries non-industrial. Assuming for-the sake of this article that tire AME would have found the injury non industrial, can the stipulation be set aside?

The Board on Reconsideration stated that the executed stipulation could be rescinded because the underlying facts had changed under section 5803, which states that good cause under 5803 to reopen a case is “newly discovered evidence previously unavailable. A change in the law, or ‘any factor or circumstance unknown at the time the original award or order was made which renders the previous finding and award inequitable’”..

Applying that law, the appellate court quotes Huston v. WCAB that the stipulation would have had to be “entered into through inadvertence, excusable neglect, fraud mistake of fact or law, where tire facts stipulated to have changed or there has been a change in the underlying conditions that could not have been anticipated, or where special circumstances exist rendering it unjust to enforce the stipulation…. (w)hen there is no mistake but merely a lack of full knowledge of the facts, which… is due to the failure of a party to exercise due diligence to ascertain them, there is no proper ground for relief”.

This Court stated that newly conflicting medical evidence may not be considered a change in the facts sufficient to rescind the stipulations. Medical opinions are not considered facts. To use a new medical opinion to undo a stipulation would undermine the whole essence of stipulations. “A parry cannot be permitted to withdraw from a stipulation simply because another expert has a different opinion.” This really makes sense. Otherwise, parties could continually relitigate an issue that had apparently been resolved simply by getting another medical opinion.

The Court even went so far as to state that rescinding the stipulation on the basis of a medical opinion without giving the party adversely effected an opportunity to adduce evidence in support of the stipulation, may be a denial of due process.

Therefore it is advisable that you do not enter into a stipulation to injury if you are then going to go to an AME and there is any doubt as to the injury being industrial.

Multiple Penalties May Result From Non Payment

One of the most significant cases of the year has been decided by an Appellate Court. This decision will definitely affect the way you administer your file. The case may also force you to rethink your position every two weeks in regards to denials The carrier in this case made TTD payments every two weeks based on available medical reports. The carrier. later refused to make 11 payments of TTD, based on later medical reports. The applicant notified the carrier after each refused payment that she would seek a separate penalty for each separate refusal. (This is. important because you will find applicants will now request a penalty after each missed payment on many of your cases.)

The case went to a hearing and the carrier based its denial of payment on the later reports. These reports were found inadmissible. The carrier never challenged the inadmissibility. The WCJ awarded 11 separate penalties, instead of one.

The Court analyzed Section 5814 and the existing case law regarding penalties. The Court indicated that a penalty is both remedial and penal. It was further indicated that the rule of liberal construction mandated successive delays in payment to result in successive penalties. “Multiple penalties must be assessed for successive delays so long as separate and distinct acts of misconduct are involved. Where the circumstances disclose separate and distinct acts of delay or nonpayment, and prior notice was given of the applicant’s intent to seek separate or additional penalties for such acts, then multiple penalties are appropriate in a single penalty proceeding.”

The rationale was that the resulting delay is of little consequence to the carrier, but may be disastrous to the applicant. The applicant may not be able to get medical treatment elsewhere, or be able to afford the basic necessities of life. The Court indicated that each time the carrier denied payment the applicant had notified the carrier qf her objection to the refusal and her intent to seek a separate penalty for each refused payment. The Court stated that this allowed the carrier to reexamine their refusal to pay. Every time the applicant gave notice of her objection this communicated her refusal to acquiesce to the carrier’s refusal to pay.

The Court was aware this decision will greatly increase the cost of workers’ compensation. The rationale is that “short delays or small reductions in payments may have catastrophic consequences to an injured worker.” In this case one penalty would have resulted in a payment of $3,057.60. Eleven penalties resulted in at least $33,633.60.

Please also note another recent penalty case indicated that a penalty on interest that was incorrectly paid would result in a 10 % penalty on the entire class of benefits for which the interest was due.

Medical Treatment Billing Analyzed In Writ Denied Case

This newsletter has not addressed Writ Denied cases in the past.  However, there was a recent case that may be beneficial in correctly evaluating the validity of a treatment lien.

Dr. Roback became the Applicant’s treating physician. “He referred Applicant to Lien Claimant Bio-Thermology for a thermogram, and t o Lien Claimant Center for Occupational and Sports Testing (Cost) for Arcon testing.” Defendants filed objections, including an objection for the reasonableness and necessity of the treatment performed.

The main issues were settled by C&R. At a lien hearing the WCJ ruled that Dr. Roback inappropriately billed as a medical-legal evaluator.  The WCJ made other rulings with which Lien Claimant took issue. In Lien Claimant’s Petition for Reconsideration, one of the issues presented was that the WCJ indicated mat no penalties were due under Labor Code section 4622 since Dr. Roback was a treating physician, rather man a medical-legal evaluator. This is an important issue to analyze when the Lien Claimant is requesting penalty and interest.

The WCJ also did not allow penalties and interest under Labor Code section 4603.2, stating Dr. Roback mislabeled his billings as medical-legal instead of as treatment bills. The WCJ also considered the billings excessive. The WCJ indicated mat the doctor could be paid for his reasonable treatment for the back injury, but mere would be no imposition of penalties and interest.  The WCJ disallowed the charge for the thermogram. Lien Claimant argued mat a Medical Advisory Opinion would allow the charges for the thermogram.  The Industrial Medical Council adopted its own opinion in 1994, “which stated that thermography ‘is an adjunctive diagnostic tool for nerve root injuries with radicular presentation where the patient is unable to undergo an EMG.” In this case, the Applicant had an EMG, making the need for the thermogram unreasonable. This Applicant also had an MRI. The WCJ concluded that the close proximity in time between the MRI and the thermogram made the thermogram unnecessary. Thus, when evaluating the payment for a thermogram, see if an EMG or MRI was previously performed.

The WCJ then evaluated the costs for Arcon testing. The WCJ used the Official Medical Fee Schedule to determine the proper code under which to bill. The WCJ used the schedule as a “guide”. Therefore, the Official Medical Fee Schedule should be used as a “guide” to determine payment.

The last issue the WCJ dealt with was the billing for medical-legal evaluator.  The WCJ determined this billing was unreasonable since the doctor was designated a treating physician.  Defendant’s failure to object to the charges did not convert Dr. Roback’s status to medical-legal evaluator.

How Do You Properly Use Labor Code Section 5500.5?

The predominate theory in the industry is that you still use Labor Code section 5500.5 as was done in the past This theory is that you take the last year of the applicant’s employment or injurious exposure and figure out who had coverage in that last year. That would determine the responsible carrier. Nothing could be further from the truth.

Even though Western Growers v. WCAB (Austin) 58 CCC 323, was decided in 1993, many defendants and applicants attorneys are not paying heed to this significant ruling.

Two carriers were involved. The applicant was a farm worker who began working in 1962. In 1985, the applicant had major depression and was hospitalized during carrier number one’s coverage. The applicant did not become disabled until March of 1987 during carrier two’s coverage. The applicant was not P & S until February 1991. The WCJ found one cumulative trauma for the entire employment even though four cases had been filed.

The Court first indicated that”… if an employee becomes disabled, is off work and then returns to work only to become disabled, there is a question of fact as to whether the new disability is due to the old injury or whether it is due to anew and separate injury.”

The Court interpreted Labor Code sections 3208.1, 3208.2 and 5412 and how they applied to 5500.5. “Under section 3208.1, an injury causing a need for medical treatment is compensable even in the absence of disability.” 3208.2 deals with the combination of injuries and not the periods of disability. The Court reviewed the legislative intent of 3208.2 which was adopted to not allow the merger of past specifics into a cumulative trauma.

The Court distinguished Aetna v.  WCAB on the basis that there were two periods of disability without a compensable injury. In Austin there was two periods of disability linked by the continued need of treatment.

The Court reviewed 5412 and stated the date of a cumulative trauma is the date the applicant first has a disability that he or she knows is work related. The Court went on to state that where there is but one cumulative trauma, “…liability for the entire injury is imposed on the carrier who provided coverage during the year immediately preceding the date of injury or the date of last exposure, which ever occurs first” Under the set of facts in Austin, die first carrier, thus, became the responsible carrier under Labor Code section 5500.5. The reason for this decision is that the date of injury was determined to be under the first carrier’s coverage.

Thus, one must look to whether there is a single cumulative trauma and apply the Austin case looking at the date of injury. If not, look to whether mere are two separate cumulative traumas of specifics and apply the Aetna case.

Duties To The Employer Under The Policy Clarified

A continuing line of case law is being developed relating to the carriers or third party administrators duties to the employer. These cases deal with when there may be a breach of contract.

This case revolved around whether an employer had to exhaust their administrative remedies and procedures prior to instituting a civil action. The court ruled there was no such administrative review necessary.  However, the Court did review previous cases about what is in the express and implied contract terms of a workers compensation policy. This court reiterated that the insurer’s alleged “pattern of failing to pay claims promptly, defend them diligently, or assign them reasonable reserves…” could amount to a breach of contract. They added that “allegations of undue delay in resolving claims may signify a violation of the ‘prompt payment obligation specified in the insurance contract.”

The court then went on to discuss the hiring of experts, specifically inadequate legal and medical advisors.  The court indicated that the hiring of inadequate and incompetent legal and medical counsel could be a breach of the implied covenant of good faith and fair dealing in all workers’ compensation policies. The court intimated that it will specifically look to see if this is being done by the insurer with the intent to charge higher premiums and deprive the insured of a dividend.

The court has yet to address the issue of what is the hiring of inadequate an incompetent legal and medical counsel. This will probably be determined in future cases. However, one should be cognizant if the issue before it becomes the subject of a lawsuit for the breach of the policy’s terms.

The court has implied in previous cases that the setting of reserves will be evaluated also in this regard. Thus, if the insurer is setting reserves and billing the employer for legal counsel in the policy at a given rate and then hiring hearing representatives at a significantly lower rate this may be a factor. The quality of the counsel may also be a factor. For example, the applicant may be represented by an attorney who is recognized as a specialist by the State Bar of California. The question then becomes what is adequate representation for the employer.  Surely, a workers’ compensation defense attorney who is also a specialist certified by the State Bar would be sufficient. Probably, all attorneys who regularly practice workers’ compensation defense would also be sufficient. The grey area may be when the insurer uses hearing representatives. This will ultimately be decided by appellate courts in a breach of good faith and fair dealing claim.

New Cases Discuss Apportionment Of Disability

Two new appellate cases in the January 1996 CCC’s discuss the issue of apportionment and some related issues and provide a good review and some clarification. Both cases are non-published in the official reports but still make for good argument.

In the Aanenson case, the neurologist reporting for applicant gave a specific work restriction. In an additional letter to the attorney he gave an additional prophylactic restriction but indicated that this should not increase the overall disability. The additional restriction was not rated. The court indicated it was wrong not to rate this even if the doctor did not mean for it to be rated.  It was there, so it had to be rated. The case also dealt with a psychiatric issue.  Defendant’s are liable for an industrial injury mat is accelerated, aggravated or “lit up” a preexisting condition. Here there was preexisting non industrial Bell’s Palsy. The psychiatric doctor did not explicitly state that the applicant’s apportioned disability was caused by me natural progression of a preexisting, nonindustrial condition.  However, the doctor did prepare two forms indicating the applicant’s projected level of disability if she had not suffered die industrial injury and the other form indicating the impairment in the presence of the industrial injury. The court indicated this was sufficient under 4663 because the report contained many references to the factors the doctor was considering in apportioning disability.

The court also indicated that the stress of rehabilitation could “light up” the previous injury. Defendants would be liable for all expenses treating that injury and treatment could not be apportioned.

In the Kempe case the applicant had a 1988 back injury in which they stipulated to 10-¾%. In 1992 the applicant had neck injury in which the AME indicate that the overall disability for both injuries was 36-1/2 percent. The judge recalculated the first injury based on the applicant’s age and occupation immediately preceding me 1992 injury at 12 %. The judge men subtracted 12 from 36-1/2.

The court indicated that where successive industrial injuries result in disabilities which become P & S at different times and overlap you determine die combined disability and then subtract the percentage of disability due to die prior injury. In this case that would be 10-3/4. Here there was no claim of rehabilitation between injuries as in the Robinson case. Here die neck condition had not unproved at die time of the subsequent back injury. So the court determined that apportionment was valid under Labor Code section 4750 because the applicant’s preexisting neck disability raised the existence of overlap.

The Scope Of Discovery Of Med/Legal Charges Decided

In a time when the Board has established lien units, specifically to deal with liens, an appellate court has given some guidelines as to interpretation of Labor Code section 4628 in dealing with those liens.

The Court first indicated that 4628 was really an anti-ghostwriting statute. The statute was for the purpose of controlling the quality of the report. The statute enumerates the responsibilities of the signing doctor.  Subdivision (d) the Court indicated does not limit or regulate the amount of legitimate fees a doctor or clinic can charge.

When disputing these costs this opinion gave some guidelines as to what is discoverable from the entity involved. Defendants do not have an unfettered access to business records.

“ Defendant’s may only seek discovery of relevant and unprivileged information mat will assist them in determining the medical services performed by the physician, the amount of direct charges for me physician’s professional services, and the amount of costs related for related medical tests, clerical expenses and overhead.”

In interpreting this statute the opinion indicated that “…the statute merely limits the types of charges that can be reimbursed; it does not limit the amount of the charges that can be billed.” Nothing in 4628 (d) limits what can be charged and does not restrict a clinics ability to make a profit. It is up to the Board to determine what constitutes reasonable charges by factors such as those enumerated in Gould v. WCAB.

The Court indicated that Labor Code sections 4621,4622, 5307.1, and 5307.6 are the appropriate sections for the defendant to raise to challenge the reasonableness of the medical-legal charges. Once challenged, the clinic or doctor must provide sufficient justification by way of itemization under sections 5307.1 and 5307.6.  In determining what a defendant may be entitled to, the Court indicated that defendants do not have an unfettered right to books and records regarding the clinics overall business operation. The clinic does have a privacy right in financial and employment information unrelated to the preparation of the report. Tax returns are not discoverable.

“Defendants are entitled to relevant and unprivileged information that will assist them in determining (1) the medical services performed by the physician signing the report, (2) the amount of direct charges for mat physician’s professional services, and (3) the amount of the reasonable costs for lab exams, diagnostic studies, medical tests, and clerical expense related to producing the report.” It is then up to the Board to determine what is discoverable in order for defendants to determine the reasonableness of the charges.

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